Why You SHOULDN'T Use A Stocks & Shares ISA
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- Опубликовано: 29 окт 2021
- IMPORTANT UPDATE
The UK Government has slashed the 0% Capital Gains amount from £12,300 to £6,000 in 2023/2024 tax year and down to £3,000 the following year. This significantly affects the points discussed in this video, but for very low amounts invested initially, where even £3,000 is an exceptionally high gain relative to money put in, the video still explains a useful point.
In this video I will explain why you shouldn't use a Stocks & Shares ISA.
Stocks and Shares ISAs are a very popular way to invest in the UK because they mean you don't have to pay capital gains and dividend tax.
And most people automatically assume that they HAVE to use a Stocks and Shares ISA to invest - otherwise the taxman will decimate your portfolio.
But the UK also has very favourable 0% tax bands on capital gains and dividend tax which mean a Stocks & Shares ISA is not really going to be relevant for many people.
And if you are investing smaller amounts, a General Investing account can be a better option.
This is because Stocks & Shares ISAs are generally more expensive - whatever it is that you invest into - ETFs, US stocks, UK stocks, dividend stocks or anything else, there is usually a cheaper way to do it outside an ISA than through a Stocks and Shares ISA account.
And especially if you are starting out, a free or cheap General Investing account can be a great way to try things out and learn the ropes without having to pay more.
And you can always switch to using a Stocks and Shares account later if your investments grow - your annual ISA allowance is £20,000 which is plenty for most people.
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*IMPORTANT UPDATE*
The UK Government has slashed the 0% Capital Gains amount from £12,300 to £6,000 in 2023/2024 tax year and down to £3,000 the following year. This significantly affects the points discussed in this video, but for very low amounts invested initially, where even £3,000 is an exceptionally high gain relative to money put in, the video still explains a useful point.
I only just found out about this, what a useless government making things up as they go along.
They are robbing us blind
I was thinking about this as soon as you mentioned the tax rules in the video, I assume you now think ISA is better?
Thank you. So called rich tax. Thanks to the government for telling me I'm rich, I never would have known otherwise.😮
Time to vote for someone else.
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024
Since risk is at an all-time high right now, perhaps you should be a little more patient and return when it has decreased. Alternatively, you can consult a trained financial expert for strategy.
Yes true, I have been in touch with a brokerage Advisor. With an initial starting reserve of $80k, my advisor chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
Angela Lynn Shilling is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment
I searched for her full name online, found her page, and sent an email to schedule a meeting. Hopefully, she responds soon. Thank you
I disagree. Even if someone isnt putting the maximum into an ISA it’s still worth it, as over the years it will grow and compound. As an example, I’m approaching 100K in my ISA, not through deposits but through growth and if a friend of mine started today, it would take them 5 years in deposits to catch up. Later down the line in 20 years, I will have a huge investment portfolio that makes me a lot of money, whether that’s through dividends or capital growth and it will all be tax free. Don’t just think about the now but think about what the ISA could be in later life. No point investing through a general account and then later down the line having to liquidate it and only be able to put in 20K a year.
Gov could also lower the allowance to 10K a year or something in the future too. Something to consider. always use an isa.
Simple……I agree 100%
Yep agree
100% agree deffo worth it
Spot on, I agree completely.
If you were lucky enough to have bought Greatland Gold shares in 2015 for 1/10th of a pence, and bought 5 million shares for £5,000 and stuck them in your S&S ISA, five years later that £5000 would have turned into around £1.75 million. It doesn't happen very often, but it is rare examples like this when you definitely want a stocks and shares ISA.
Investing can be a very impactful way to grow your money, especially when you consider the three main factors that play a role in how much wealth you build: rate of return, how much you invest each month and, of course, time.Big ups to everyone working effortlessly trying to earn a living while building wealth. I’m 50 and my wife 44 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle made it possible for us this early even till now we earn monthly through passive income...
I understand the fact that tomorrow isn't promised to anyone, but investing today is a hard thing to do for me now because I have no idea of how and where to invest in.I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.?
I so much endorse the services of Regina Louise Collaro, a US-based financial advisor and consultant. Partnering with an international organization, she has been instrumental in guiding my financial journey with unwavering support until my goals are met. Selecting the right financial consultant is as crucial as finding the right life partner, as both can significantly impact your life's trajectory. I'm grateful to have found the perfect financial consultant who has helped me achieve my financial objectives, from education to nearing retirement.
I value your recommendations. It's challenging to locate a trustworthy person. I could really use your investment advisor after seeing how much money you've made through investing. If you don't mind revealing her information, that is.
It's surprising to come across Regina Louise Collaro's name here. I've always been uncertain about hiring an investment advisor. Just to clarify, I began collaborating with Regina in 2019. She oversees around 70% of my investments, leaving me with the remaining 30%. My stance has always been that I prioritize my own finances, but she has convinced me of her extensive knowledge regarding present circumstances and upcoming trend
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Interesting take on ISAs. Personally I use Vanguard ISA because I'm not smart enough (or possibly I'm too lazy 🤣) to do my own due diligence so leave it to the experts for a safer steady gain. I only put a small amount into individual stocks invest account (212) which I see more as "for fun" OR "a hobby with the potential to not cost me much / make a possible profit". Sort of like a casino with better odds.
Same here..,,😀
And me & if the GIA got big enough I would utilise the capital gains allowance yearly on drawdown.
It makes sense to use both an ISA and GIA (if you are lucky enough to afford it) to take advantage of the tax free allowances. This has only recently dawned on me as a way to have more time in the market and then "bed and ISA" those investments or crystallise the gains in a tax efficient manner. Chris Bournes YT channel covers this very well. I think your title perhaps should have been entitled "Don't forget your GIA" (or along those lines). However you're correct in bringing this investing strategy to our attention. Your take on it is good food for thought.
Thanks for this. I’m very late to the game and this is SO relevant to where I am now. Difficult to find info on RUclips that is free from BS and unbiased - great channel. 👍
I have Sipp with vanguard, do you recommand opening gia/isa on a different platform to diversify the Holdings?
Very helpful advice, thank you. I'm quiet new to investing on the US stock market. Can you purchase one US stock (e.g. Tesla or NIO or Xpeng, etc) on a Stock & ISA account in the UK if you only want to focus on one stock (company) just like you can with a GIA account?
This was good, thank you Sasha but it has actually made me realise that I dont have a profit realisation strategy. Is it better to sell after a run of success, extract the profit and then re-buy in? Or is it better to just stick in for as long as possible? Is it different for different classes, so with an ETF do you just stick in but for stocks you should have a target sell price? A video on this would be REALY useful please.
That would depend on what you are investing for. If it's for a retirement income, a pension then it's a buy and hold strategy. You coud5de-risk when you get nearer to your retirement date. But that depends on whether you want to buy an annuity or do a drawdown, and your risk tolerance and time frame. If you are just investing for the sake of investing, than I guess it's up to you, sometimes you might sell a share when it's gone up and then it continues to go up even further. Buying individual shares is very risky, for most people better to stick to a passive strategy, using index funds or etfs that track an index. Don't look for the needle just buy the haystack. Or at least put most of your money into tracker funds and follow a passive strategy, buy and hold etc then you could invest a small percentage of your money into more risky areas or individual stocks for entertainment to keep your interest and help you stick with your passive strategy, stay the course, be well diversified and keep costs low. Just watch sine John Bogle videos, he was the founder of the Vanguard asset management company in the US, and first provider of index funds to retail investors. Also look at monevator website, the information is out their if you search for it. It's sometimes called sensible investing or lazy portfolios because they don't require much time to manage, just a once a year rebalance is all that's really required. Why gamble with your money buying shares, when you can own whole indexes very cheaply, hundreds or thousands of stocks and bonds. Just check it out
Great. Thanks! If I just wanted to buy some index funds and not invest too heavily, would you still recommend I invest in an isa?
makes sense when you are starting out on the investment side.
And it is definitely worth, over time, to also get an S&S ISA I think.
Do you think that an S&S LISA is still worth it up to the £4k pa limit before looking at your other options?
EDIT: Just for clarification, I am referring to retirement. Not planning on touching the money (that I am talking about here) till then
hi sasha its probably too late now for you to see this, but i have a question.
do you know if there are any rules against using one of the 0% commission apps as a sort of incubator account for the ISA. for example if i bought a stock at £1000 and it grew by 1000% and was worth £10000 could i then sell it and move it into an ISA without being penalised in any way ?
my thoughts are that this is like a cheat code for long term investing but not sure if theres any rules against it.
hope the question makes some sort of sense to you.
Wouldn’t the problem with transferring your stocks from a normal account to an ISA mean that you buy in at the new stock price. Say you had 5k invested in a portfolio and you left it there for ten years and you say got capital gains of 95k and you then decided an isa would be better for future because of no taxation would you then have 100k worth of stocks but have less of them because the value of those stocks increased over the ten years? Or would u keep the same amount of stocks and just pay the fee for transferring to the ISA account, I’m new to this stuff so any help would be appreciated.
What about Trading 212 that has a stocks and shares ISA that has no monthly fee and exchange rate fee for US stocks is far less than Freetrade?
Hi
Is stake have the option of TP and SL. Also can we trade ETF. Thanks
My approach is to use both but I prioritise the ISA and once that is filled , move onto the general investment accounts. As an investor my plan is to leave the investments alone for 10 yrs at least and so having tax protection is important. These generous ISA allowances started recently and may change.
I’m glad I’m not the only one that thought of this!
Question. If you hold equities for a long long time, should you or can you sell and realise 12,300 and then rebuy it right back. do this right at the end of the tax year. Therefore over 10 years you would have made use of that allowance and have 123k free of capital gains? all you pay is the transaction fees. I have etorro account and im very much thinking about this...
Question: If i invest for say 5 years then cash in some shares, do i get five years of capital gains allowance (61,500) or only one years allowance (12300) before paying tax?
Found your videos yesterday. Thanks for the advice really helps understand this stuff.
Interesting perspective and mostly agree with this with one exception. Even if dividends below £3k the income still counts for ‘taxable income’ (at 0%) which is relevant for the calculation for Child Benefit so is relevant in this case
Does the capital gains tax apply at the point of sale on a S&S ISA? So if I make £4k a year for five years then sell is that £20k in one year, or is the tax free applicable to when the money was earned ?
Thanks for your sharing. Does it mean if we invest shares via ISA account is tax free without the threshold of 12300 Capital gain allowance & 2000 dividend allowance per year? Or we suppose to aggregate the ISA account gain/income together with any free trade general investing account to claim those tax allowance for every fiscal year?
Tax free
Excellent work (as always!) Sasha. You are one of the very strongest role models for thinking differently and deliberately challenging your own habits and assumptions. I’ve said it before, but you really deserve a much larger RUclips audience.
Like you, I also use my ISA a lot; but I also invest in non-ISA stocks in a GIA, and buy cryptocurrency through eToro.
would selling investments in a GIA and moving the money over to an ISA, Lose me any compound interest on stocks like the SNP 500? Thanks for the video
You are absolutely right. Brilliant video!!
Hello Sacha
Thank you for the video!
I’m thinking of having ISA on FreeTrade. Do they still charge 0.4% even I only buy S&P 500 fund such as VUSA or VUAG? I assume it’s in GBP, but how the price is made is based on S&P market which is USD. Is there any fee from Feetrade, or is there any hidden fee of currency exchange due to the nature it is in GBP but tracking USD based?
The 0.45% is a Forex fee so doesn’t apply if you buy in £ - eg VUSA. The only fee there will be your monthly £3 ISA fee 👍
@@SashaYanshin stamp duty?
@@dinubudai4007Stamp duty on UK stocks applies whatever account you use - ISA included.
Free-trade stocks and shares ISA...is this "do it for me" account? I want to open S&S ISA and think "do it for me" would be best for a beginner who is still learning. So far I've been looking at these type of ISAs from my bank. Thanks
Interesting video!
I have an investment ISA then a couple of general investment accounts as it doesn’t make sense to buy individual shares in my ISA (fees and availability issues). I focus on investing in funds, trusts and ETF’s in my ISA then just have relatively small small amounts in general investment accounts 😊
Pleased to see the ISA allowance wasn’t changed in this budget. 👍
Great video. QUESTION: let’s say I have a trading 212 NORMAL account. And I invest in a stock that doubles in value. I sell all my shares at this peak and then the stock crashes and I buy in at the dip at a much lower price. Do I need to pay tax. Or not, as I invested all the profits back into the same stock. In other words do I only pay tax when I withdraw that money out of my trading account? Or is it the second I sell even though I bought back into the same stock…Thanks
yes, you only pay tax when you withdraw the fund
I just started investing through FreeTrade GIA and was confused If I had to switch to ISA. You have exactly answered the doubts and clarifications I was looking for. thank you. very informative.
I opens a savings account on stocks and shares but my money seems to decrease a lot. Does it ever go up?
Interesting video Sasha, I clicked the second I saw the title 😀. I’ll stick with my ISA on the Barclays platform. I do have an account outside the ISA but that’s because I didn’t really know what a stocks and shares ISA was when I started my dividend portfolio a decade ago. Each year I do what’s called a Bed and ISA transaction which shifts 20k of the highest dividend stocks from my non ISA account to my ISA account to avoid any tax on dividends. Great channel Sasha, keep up the good work.
Thanks! I was talking about doing the Bed and ISA in the video but didn’t call it that as it would probably confuse a bunch of people 😂
@@SashaYanshin LOL!
I have this exact account and this exact problem and I did not know you can move stocks from the regular smart investor to the barclays isa
@The Compounding Investor Wow sounds so great. Thank you for mentioning this. I was not aware of Bed until now.
@@davidjones4130 Hi David, there is a drop down menu on the platform and it is really fast and easy to do. It automatically does the selling and rebuying for you. I’ve used this function for several years now
I did have a question regarding this. For small investors like myself, would this video still apply for me?
If I plan to invest £300 a month into £VUSA and decide to take it out in 20-30 years, with the amount sitting at let's saying 100k, would I therefore not have to pay any tax as I've used 12k of my capitals gains tax allowance each year? If not, then surely an ISA is worth it if I'm going to be taxed on the 100k. Sorry just clarifying
Nope - the £12.3k allowance doesn't carry over or accumulate. It only applies to when you sell AND it could also change in the future.
So if it was the same and you sold £100k and say £50k of that was the gain, then you'd owe tax on (£50k - £12.3k) £37.7k.
However - if you invest £300 a month into VUSA for a year and that VUSA grows by 20% (that's very very high), then you have about £4k in that account with £400 as the gain (roughly - assuming growth and deposits are linear).
You can then go and open an ISA, move the money over and not owe anything in tax.
There are drawbacks - if you DO want to use the full £20k allowance next year for example, then you might wish you used it this year. Also you'll have to wait to sell, funds to clear and then to move money over so you'll be out of the market for a few days.
So definitely plenty to think about. 👍
what is th best ibkr plan you think.. is there any hidden fees.
This is such a fresh perspective! I’m new to investing as we’re saving for non-military life and your channel has been so helpful. I opened a vanguard isa a few months ago but I might to this as well - I’ll use your links if I do 😊 I’m actually a blogger and randomly stumbled upon your keywords video the other day, such a good breakdown of things I hadn’t considered, thank you!
I'm thinking of setting up a s and s isa on Invest Engine which I thought was free to set up but now I'm not not sure. I'm also buying a flat with cash so I think am isa the safest bet and one less hassle on my tax return. Don't know if capital gains tax and dividends tax is separate to tax from rent income, i need to do some research.
Thanks, Sasha! As always provoking title, but enjoying watch. Thanks for useful info and food for thought!
👍 Thank you!
Great video and understanding each concept of investment options really helpful & enjoyable as always Sasha 👌
Thank you Iain! I am finalising some elements of the membership perks - should have updates very shortly!!! 🙏
Interesting video Sasha, Keep it up. I have a vanguard stock& shares ISA and a free trade general investment account. Is it possible to merge my Lucid shares in Free trade to my Vanguard Isa account to avoid tax? If yes how will I do that?
It is unfortunately not possible as the Vanguard S&S ISA only allows you to hold vanguard index funds, so no shares. You would have to keep your shares on Freetrade until you can create a new ISA is April next year (new tax year). It is difficult to hold shares long term.
Definitely a useful video. As you make a point of caveating that it is just a devil’s advocate idea to consider, there’s nothing to argue for or against. It adds an interesting option to consider in the event someone does manage to maximise their ISA contributions in one year, they can still top up in a general trading account, if they come into funds they want to deploy immediately, and use it as overflow outside of their ISA.
I use ISAs not only to protect my stocks from CGT and Divi Tax, but mostly to save me the hassle of filing a tax return every year! Then use the £12.3k allowance for Bitcoin. Defo use the spouse allowance too!
Completely the right way to do it, far too much hassle to bother with filing a tax return and working out all the details and pools of trades, I suspect most people have NO IDEA!
Sasha thank you for all your hard work and valuable content you give to us.
I’m looking for a SIPP platform to invest in individual funds..are you still happy with your Freetrade platform?
Cheers 😀
This 20k tax free acumulate over the years? If I deposit 20k in 2020, 2021 and 2023 are all tax free if I decide to sell in 2023 or in 2023 I will have only 20k tax free?
can we use it to trade options on ikbr
Thanks Sasha. Both my wife & I work in tech and have stock options that vest every so often. I'm thinking of liquidating shares up to the tax-free threshold then transfer the cash into ISA Freetrade and purchase the same stock during the trading window. Btw, I've been following you for some months now and you've encouraged me to start investing. Based on much of your advice, I've made significantly more than the £36 annual Freetrade ISA amount, so I'm currently in the black :) thanks for all your hard work!
Thanks Sasha, as always - great job! Would you know if there an option to transfer an ISA portfolio to a standard GIA account on Freetrade?
Only option is to sell shares and move money over. 👍
Hello Sasha,
Thank you for the video, am a new subscriber. I have seen your another video(posted an year ago) and you mentioned saying there is no capital gains tax or dividend tax limits (whatever money we earn inside ISA stocks and shares account) . HMRC website also says the same that there is no tax on any capital gains or dividends(whatever the gains) .
But now in this video you have mentioned about only 12300 tax allowance cap for ISA gains per year. Please can you clarify.
The 12,300 is tax free OUTSIDE an ISA.
@@SashaYanshin Thank you very much for the clarity.
@@SashaYanshin Thanks for your video. Could you please ask if the 12,300 tax allowance is only for stock/share... How about if I have another job where I already earned more than that value. thanks
@@linhhoangngo462 for you work related income you pay an income tax and the income generated from your investment is called capital gain which has a tax free allowance of 12xxx pounds… those are 2 different things
Use it while you can :-)
I collect around £4,000 a year in dividends a year all in my isa . I sleep well at night.
That's what, 55k invested in dividend stocks?
Good for you! 👍
Any reason why you prefer free trade over t212? No fees to throw money into s&p500 VUSA on there.
Because you can actually open an account with Freetrade, but not with Trading 212 since January.
@@SashaYanshin yeah, fair point 🤣
Been on the Freetrade waiting list for over a year, will they ever open up to new customers again>?
Do you mean Trading 212? Apparently they are slowly processing the waiting list.
Thank you, great advice!
👍
I have FT ISA and it's great but they don't have nearly as many stocks as trading 212. On the other hand FT is much better with AIM stocks where 212 is absolute rubbish (it takes days to fill an order)
As far as non-isa accounts go, IMO the best is IB which I know you are using as well and I really appreciated the video you made about it.
I agree everything depends of your strategy for me I set up a general account for make trades and try to gain 12K year ( it is not easy ) end of ISA year transfer to my ISA and buy companies for long 5 to 10 years or companies pay a good dividends
I agree that it is not always suitable. its the same as isa cash savings account. For me personally, the new providers like Freetrade or trading 212 make it a no brainer in the long term, espeically as they seem to be going after pension pots in the long term via the max allowance being frozen and i suspect it will slip behind inflation for a long time as a sneaky stealth tax.
Very clear information thanks 😃
👍
I have been paying monthly into a stocks and shares ISA but now my income has dropped (by choice). Not sure whether to keep paying it from savings, pay less or stop altogether! I suppose it depends on when I need it, possibly in four years time.
Hargreaves charges a maximum £45 a year if you stick to investment trusts and etfs. It's peanuts compared to the future taxes. More importantly, is you time worth £1 an hour? Because do you want to be dealing with the HMRC at all?
My thoughts too. I’m happy using HL.
So if I earn just under the super tax threshold in my current job I won't have to pay capital gains tax on anything up to 12500 despite what I earn in my current job?
Beware - that limit has recently been slashed by the UK Government so the argument doesn't really hold the same way anymore.
Why pay for freetrade if you can use investment engine for free? Just because they are still new and small or is there something more to it?
Good point - Invest Engine is indeed new and yes - the DIY model is good if you only want one of those ETFs. I probably should have mentioned them 👍 Will work for anyone who isn’t looking to pick stocks.
@@SashaYanshin right, thanks for clarifying!
I’ve got a stocks and shares isa it’s with prudential rubbish. Made £500 off 20 grand in two years went up to 21500 and dropped to 20500.
I can now get a fixed rate at 5.5% in Lloyds bank where that would make £800 a year at that rate or fixed for 2 years would be £1600 ?
S&S are best for long term gain (5-7 years or more). So just hold (and buy more). Also fixed rate means you have no access to that money for 1/2 years and of course you will be taxed on the interest if above the threshold.
Wondering why Sasha stopped talking about Trading 212, not even an affiliate link. Do I missed something about 212?
They haven’t accepted new customers since January
Awesome information ! Thanks.
👍
Found a ETF that I could only invest in the U.K. through a broker that didn’t do ISAs so did some similar calculations to you, and worked out I didn’t actually need one!
Excellent vid. Different perspective is always good. Just one thing. I'm a beginner so please forgive my ignorance; Throughout this vid you quote £'s when the figures on screen say $. Was this your mistake or have I got it wrong. Thanks.
Yep - this was an editing typo - too used to dealing in $ in most of my videos. Sorry!!
@@SashaYanshin Excellent again. Superfast reply, straight to the point with no BS👍.
Can you make a video about SIPPs (Self-Invested Personal Pensions) and the pro's and cons.
I have made a couple before about the new Freetrade one - check those out!
Really good video. Some questions that occurred to me whilst I was watching it...
1. If you have a normal job and pay PAYE tax..what happens when your lucky enough to earn over the 12.3k CGT threshold? Is it automated via the platform or is it some HMRC nightmare?
2. Kinda random, is CGT the same as inheritance tax? How does inheriting a house (which obviously will be worth more than 12k) work??
Not expecting custom financial advice or anything but would be a cool follow up video.
1. If you exceed the threshold you have to file a return and pay the tax on the excess. 2. No CGT on your death estate.
Capital gains tax on an inherited house has to be paid quickly, it cannot be done with your end of year tax return. I missed the new 1 month deadline last year and got charged £100. Deadlines may alter over time so you need to check.
I have only just found your channelthanks to your FTX video!
Great contaent and very helpful. I have a dealing account and an ISA share account I bed and ISA as much as I can in to my and my wifes from the dealing account every year. Oddly my dealing account seems to recover very quickly each year, even this year!
What do you do when your Aviva stacks and shares isa goes down £1,000 in a month?
Do I sell the load of rubbish?
Gone down £2,500 now !!
Absolute rubbish
ISA is still confusing. In one of your video mentioned it is completely tax free for capital gain whatever it is? Now in this video you had a limit to capital gains around £12500. Which one is true or where should we check?
In an ISA you can have unlimited capital gains with zero tax - that’s right.
But separately from that, OUTSIDE an ISA, you also get up to £12,300 allowance before you have to pay any tax. So if you invested outside an ISA and had capital gains up to that limit, they would also be free of capital gains tax.
@@SashaYanshin Thanks a lot. If I already employed and claiming personal allowance, still will I be able to claim additional £12300 for outside of ISA?
Do you still recommend FreeTrade? I've seen many RUclipsrs now say that it is not a great option after they changed course on fees and how they use your capital?
I deleted every single affiliate link a long time ago when they started showing their true colours. Long before they stopped the affiliate programme and everybody else changed tune.
I’m now with Freetrade would you recommend I change if so to what
Thanks. Just what I needed
Can I have a cash ISA to get the tax free allowance then the following year convert that cash ISA to a stock ISA?
Yeah. You will have to do a transfer which might not be super fast but once money is inside the ISA system, you can move it around in the future 👍
Thank you for the information. Can you make a video on investing in Master Limited Company in the US? iep Icahn enterprises lp.
I wanted to invest in the company for its high Dividend but have no idea about taxes for UK citizens.
Another advantage is that many more stocks are available outside of an isa wrapper. Planet 13 is a good example.
Good point! I forgot to include that!
Is your money protected should Planet 13 go bust ?
aged well
Great video Sasha, I have a S&S ISA set up through work & their Financial Advisers, I set it up before really getting into stocks myself & I believe the aim of the ISA is to try & beat the market. Since opening my GA with Freetrade it has been great for me to learn how to invest & now this video puts me much more at ease with sticking more money into my GA as it is very unlikely I’ll see gains that high & need to pay tax. As my confidence grows I’m sure in the future I could even move the money from the original ISA to another.
The trick of taking it out start of April & then shortly after the new Financial Year starts made me chuckle as it makes complete sense!
Is Freetrade safe?….there doing a shares give away up to jan 2024 that’s making me nervous…
Sasha, I use etoro as secondary investment platform to buy dips and sell later with a gain, my capital gain is in much less than 12300. Do we still needs to file a tax even though my capital and dividend gains are less than specified limits.
Same for me, just started out this year, I hope / guess not. Let's see if anyone here knows about it...
Hopefully sasha will reply but my understanding is that you would only need to declare capital gains which are under 12300, if you already complete an annual tax return. If you have a regular job and your employer takes care of your tax and NI you would only need to declare gains over 12300.
can you have 1 isa and multiple general investment accounts in the uk?
You can have unlimited ISA or Gia accounts, but:
Within tax year you can put money to any of all of Gia accounts
Within tax year you can put money only to one ISA account. If you want to user other provider you need to wait for a new tax year
The point of an ISA is, as you said, to accumulate over many years (10-20) and then use that money to purchase something like a house or a pension annuity. With a no tax allowance of 12000£ per year you cannot purchase much. The other big thing to consider is that in your general saving account you won't be able to ever change your investments or rebalance without incurring into taxes. This means you will have to stick to your investments forever, and this is a big disadvantage IMO
Thanks Sasha for another great video. You say that Free Trade charge the least for an ISA account but seem T212 charge nothing (ignore fx). What am I missing here?
Trading 212 haven’t allowed new customers since January
Haha fair point. Cheers.
Which one would you recommend I am a total beginner?
1. FTSE 100 Index Unit Trust Accumulation
2. LifeStrategy® 60% Equity Fund - Accumulation
3. FTSE All-World UCITS ETF (VWRL)
4. S&P 500 UCITS ETF (VUSA)
was just going to open a freetrade S&S ISA from an earlier vid of yours and know i come across this!...ha , worth a watch then me thinks
Not sure I want to use freetrade without paying into an ISA now that they lend out shares
These are very valid points - for many folks an ISA account might not make a huge amount of sense. That being said, Sasha is also correct to say that it always depends on exact circumstances. (I have a speculative play going on in an ISA account, which I really seriously _would not_ want to be subject to normal capital gains tax - if it continues turning into a real winner.)
very good advice, thanks for sharing!
Thanks!
What about stamp duty tax when purchasing shares?
That applies inside ISAs too...
Freetrade ISA account for shares and stocks is now $5 per month, I've just got started 👍 helpful info, thanks for the video!
I'm sorry but I totally disagree with this video. It leaves out two important things:
1) You lose the allowance if you don't use it. Which means that if in 10 years time you need a tax wrapper you can only start with that year's allowance, and we should pray it won't be decreased. Paying fees for an ISA is itself an investment to keep the tax wrapper.
2) Taxes changes, and that 12k capital gain allowance could be decreased or removed completely any year. In the UK you currently have a government that likes high taxes, and they have already decreased the dividend allowance from 5k to 2k a few years ago. And that's assuming the "Conservatives" stay in power; the opposition are full blown Marxists and if Labour was to win the next elections they'll surely remove the CG allowance and probably increase its rate too.
Thanks for the comment. I agree with your second point - definitely think the £20k allowance is very generous and if you are in a position to, you can take advantage now should it change in the future.
But on #1 - I hear what you’re saying but I did discuss this exact point in the video and the point is that somebody on a low wage depositing £50 per month into their investing account won’t really miss out on the allowance whether they move it across this year, next year, or even the year after.
Many people only make low monthly contributions and I’m trying to say that it’s important to properly consider your options.
@@arraywaves No, they are ideologically Marxists, which you would know if you truly understood Marxism. Destruction of national identity and family structure, open borders and population replacement is what makes one a Marxist, not lip service to the poor.
@@arraywaves You clearly fell for the sales pitch, and you're talking about a movement that you do not understand. The fact the Labour has policies that actually damage the poor (such as mass immigration that increases house prices and lowers salaries) should give you a hint that you're missing something. The 100 millions of people killed by communism should give you another hint.
@@arraywaves The ideological foundation of Marxism is the destruction of Nations.
Do more research, and you'll find a huge rabbit hole.
Why Barclays isa shares showing Apple as zero pounds value
Most people will not want to do their own tax return and when you realise gains in an investment account you have to declare those gains on a tax return even if it is below the £12,300. You typically pay somewhere between £200 - £400 for an accountant to do your tax return which in my opinion negates the small fees you pay to have a S&S ISA account.
Not true - if you’re close to the margin or you have sold assets for 4x the limit, yes you do, but in most cases you do not and you really don’t need to pay £400 for an accountant. It is easy enough to just do yourself.
Regarding the Capital Gains tax in a general investment account. Let’s say you made £10k profit, can you sell, pay no tax and then buy back in to minimise your CG going forward?
There is legislation specifically to discourage this. You basically have to wait 30 days before the repurchase otherwise you risk the taxman coming after you if you did it just to avoid capital gains tax. It's known as "bed and breakfast trading" because traders would sell on a Friday before the end of the tax year and repurchase on the Monday. If you want to remain exposed to the asset price while you wait the 30 days a common trick is to buy a CFD in the meantime so you can effectively stay "in the game" and not miss out on any price movement within the 30 days.
@@deanwild4971 thank you very much for this explanation Dean, much appreciated!
Hey Sasha, thank you for the great video! :) I have a question though, I’d really appreciate if you could take a minute to reply.. I think you will know the answer.😁
What happens if you’re already self employed (owning an ltd) and you pay yourself director dividends already? Would that use up the annual allowance, or dividends from stocks go into a different bucket and you have an allowance for that too?
Thanks a lot and have a wonderful day.
Hajni
Thanks for this video, Sascha! This is exactly what I thought when I started investing and thought I don't actually need an ISA until my portfolio growths over £50k but I literally could not find an opinion which would support my thinking. And pressure from all sides on "you need an ISA" made me open one on free trade along my GA account there. Now I am paying £36 a year and still probably two years away from when I actually will need it. Thanks for explaining the way I could totally follow.
So you that broke that you can’t pay £36 a year 🤯
If you are based in the UK. And you use a ISA to buy US stock do you owe any tax ?
Most people buy a UK ETF for (say) S&P500 or NASDAQ 500. You can buy $ stocks but there will be charges for conversion, so most people buy the UK version of the stock/ETF if there is one and it is allowed to be bought and held in your chosen platform. There is no tax to pay on anything inside an ISA.
Sasha, I got an update from T212 yesterday saying that we can now buy actual stocks and not other blahdy blahs, you gonna do a video on this?
What do you mean? The update yesterday was that you now get stock if a company splits/is acquired/etc. Nothing much
@@SashaYanshin aaaaaaaaaaaaahh
Hi Sasha. Great video like always. If I have 10k worth stock X in my general account. They are worth 22.3k by one Yr, then I buy more 22.3k Stock X again.
But now, I sell my old 10k old stock X few days later to use my annual capital gain allocation. Can I bypass 30 days rule.
If you sell after you buy, yes - that’s a different scenario.
BUT you don’t sell the “old” shares. You will sell an average of what you now own so the price will be diluted and so will the gains.
Check my videos on calculating capital gains - search for capital gains on my channel 👍
@@SashaYanshin Hi Sasha. I have just seen the video you did on capital gain allowance. Quiet a head spin.
Did you find any software to help or can you please do video, sharing your excel sheet template to keep a track. This is very complicated and like you said the accountant won't do that record keeping. It would be really helpful.
Although you tried to explained to me anything regarding how ISA account had disadvantages, I am still using ISA account to invest without dividend tax or capital gain tax. Each year, if I earn not more than £20,000. It’s okay to me, after few years later, you will still see the progress of how much passive income you earn.
Good video and perspective. Not too much of a fan of the click baity video titles trying to get the people with a controversial statement approach, but I think in this case its kind of fair in that it challenges assumptions about realistic tax levels etc